Locked in…and locked out? Home buyers race the clock in a tight market
Apr 7, 2010
Homebuyers who locked in their fixed rate before the rate hike last week race to find a home before having to renegotiate.
April 7, 2010
Some homeowners took a gamble when they locked in at low rates before actually finding a home. And now, it’s a race against the clock, and other homebuyers, to find their dream home before the term runs out.
And the race isn’t solely caused by many home buyers being in this boat. There are other compounding factors making this race even more heated: the new mortgage rules coming into effect on April 19, the introduction of the HST in Ontario and BC on July 1 and the impending short-term interest rate hikes by the Bank of Canada.
One Calgarian couple has locked in at 3.69%, but they would likely only be able to renegotiate at 4.25%. They found one home they loved but, akin to the experiences of many home buyers nowadays, they lost in a bidding war for the property.
To summarize the crazy Canadian market lately:
Canada: Sales are up 44.2% and prices are up 18.2% from last March.
GTA: Sales are up 70% and prices are up 20% from last March.
Vancouver: Sales are up 38.5% and prices are up 20%
Lenders have also sent out notices to anyone who has been pre-approved indicating that re-approval will be necessary as of April 19 if they have not signed an offer.
The new federal guidelines require anyone buying a home with less than 20% of the purchase price for a down payment to qualify based on the posted rate for a five-year mortgage, now at 5.85%. For terms five years and longer, consumers can qualify based on the actual rate on their contract. The Financial Post
So, if you have a fixed rate locked in before the banks raised rates…GET ON IT! Time is running out and the race is on! Will you be locked in at your sweet rate or locked out of the lowest interest rates of all time?